Lawsuit claims staff underpaid at Applebee's

By WILL ASTOR - 10/5/2012

An employment lawsuit filed last week in Rochester could have a far-reaching effect on U.S. restaurants.

The lead plaintiffs in the case, which seeks class-action status, are two former waitresses in Rochester-area locations of Applebee's Neighborhood Bar & Grill. The action takes the position that restaurants should pay waiters and waitresses full minimum wage, $7.25 an hour, for any work not related to their duties as servers.

The lawsuit, filed Sept. 24 in U.S. District Court in Rochester, targets T.L Cannon Corp., a Florida company that operates 61 franchises of Applebee's International Inc. in New York and Connecticut. The complaint is aimed only at the firm's 54 franchises in New York but could be widened, said the servers' attorney, Nelson Thomas of Thomas & Solomon LLP.

If it succeeds, the suit could force all U.S. Applebee's restaurants as well as every eatery in the country to adopt vastly different practices, Thomas believes, closing a labor law loophole that lets restaurant operators underpay wait staff.

The lawsuit follows a 2006 class action that made a similar claim against Applebee's International Inc., the Kansas-based franchisor of Applebee's restaurants. The 2006 case was filed on behalf of some 5,500 servers and bartenders in a Missouri bloc of Applebee's restaurants.

Applebee's settled with the Missouri plaintiffs this year after a panel of the 8th U.S. Circuit Court of Appeals upheld a district judge's denial of the Applebee's franchisor's motion for summary judgment. Details of the agreement are still under court review and have not been published.

The newly filed New York case could enlist as many as 15,000 plaintiffs and could take the Missouri lawsuit's claims a step farther, Thomas said.

At the heart of both cases is an exception to the national minimum-wage law that lets employers pay a rate of $2.13 an hour to workers who derive a substantial percentage of their income from tips. The $5.13 tip credit assumes that tipped workers will receive at least $5.12 an hour in tips to bring their total pay up to the $7.25 hourly minimum.

The dispute in the Missouri case largely turned on how much time wait staff and bartenders spent on cleaning and other not-tippable chores. A Department of Labor guideline disallows the tip credit if at least 20 percent of a tipped staffer's time is spent on serving-related but not tippable tasks.

Citing another Labor Department rule that sets $30 as the least a worker can get monthly in tips for a job to be classed as tipped, Applebee's lawyers argued that workers are tipped even if they sometimes perform duties such as cleaning bathrooms, sweeping or filling ketchup bottles.

Courts found in the servers' and bartenders' favor.

While it takes care to assert that Applebee's servers in the chain's New York franchises spend 20 percent of their time or more doing untippable chores, the T.L. Cannon case moves the dispute into new territory, arguing that any time spent on chores not directly related to tippable duties should be reimbursed at full minimum wage, Thomas said.

Waiters at three-star New York City eateries can pull in six-figure incomes and seldom, if ever, are asked to do the cleaning chores that the plaintiffs were ordered to do, Thomas said. But legions of wait staff in more modest chain restaurants, diners and family-owned eateries collect far less in tips and are routinely asked to do cleaning and other non-waiting chores.

In the $5.13-an-hour tipped-worker credit, some restaurant operators are getting a well-deserved break, Thomas conceded. But others are using the tipped-worker provision to exploit employees, vastly underpaying waiters and waitresses for hours of gratuity-free menial work.

A request to T.L. Cannon for comment yielded an emailed response from an Applebee's International Inc. corporate spokesman: "Applebee's and our franchisees conduct business with the utmost integrity, which includes paying fair and competitive wages to servers and bartenders who are highly valued team members. Their pay is based on the tip credit provision of the Fair Labor Standards Act, which ensures that tipped employees are paid at least the federal minimum wage through a combination of cash wages and tips."

The lead plaintiffs in the local case, Ashley Hicks and Kristin Raymond, worked at local Applebee's for five and nine years. Hicks waited tables at locations in Pittsford, Henrietta and Irondequoit; Raymond worked in Gates, the court complaint states. At each location, they and other wait staff were required to perform a variety of non-table-waiting duties ranging from food preparation to general cleanup to washing windows.

The suit against T.L. Cannon cites a long list of duties that servers in New York Applebee's restaurants are ordered to perform: scrubbing chair legs, cleaning the glass on pictures hung on the walls, washing windows, cleaning bathrooms, dusting furniture, scraping gum from underneath tables, wiping down kitchen shelves and other similar tasks.

Rather than exploiting the tip credit to pay less than minimum wage for such work, restaurant operators should either hire non-tipped employees to do all cleaning and other jobs they routinely assign to servers or should record when servers switch between tipped and non-tipped duties, paying straight minimum wage or more for untipped work, Thomas suggested in the interview.

Applebee's argued in the Missouri case that such record keeping would be unduly burdensome, he said, but he does not believe that to be the case.